Vice President Kamala Harris recently announced new legislation that prevents unpaid medical bills from appearing on credit reports.
The Consumer Financial Protection Bureau will be finalizing a new rule that is estimated to remove $49 billion in medical debt for over 15 million Americans. An average of 20 points is expected to be added to credit reports.
The latest rule was implemented after the CFPB announced that medical bills are not accurate predictors of whether an individual can repay a loan, emphasizing that medical bills often cause confusion and errors.
The report, first released in 2022, estimated that there were approximately $88 billion in medical bills reported in credit reports. Following the release of the report, the three major credit reporting agencies announced that they would no longer factor in unpaid medical debts less than a year old, debts under $500, and paid medical debts when offering loans.
With the latest announcement, the remaining $49 billion will be removed.
“This will be life-changing for millions of families, making it easier for them to be approved for a car loan, a home loan, or a small-business loan,” said Harris in a statement. “As someone who has spent my entire career fighting to protect consumers and lower medical bills, I know that our historic rule will help more Americans save money, build wealth, and thrive.”
Although it’s on the rise across the nation, Black Americans are often hit hardest by medical debt.
Per a KFF Health News report, Black Americans are about 50% more likely to owe debt for medical bills. Overall, healthcare debt affects over 100 million people. Of these 100 million, 56% are Black Americans who owe money for a dental or medical bill.
Contributing factors to medical debt include increasing costs of care, racial disparities in income and a higher need for required treatment.
Per Vice President Harris’ latest statement, more than $1 billion of medical debt for over 700,000 Americans has already been canceled. With support from the Biden-Harris administration, the $1 billion was cleared as part of the American Rescue Plan. Published in 2021, the plan offers direct relief to those impacted by COVID-19.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” said the vice president. “That is why President Biden and I canceled over $1 billion in medical debt – part of our overall plan to forgive $7 billion by 2026 – with support from our American Rescue Plan, legislation that I advanced with my tie-breaking vote in the Senate.”
